"It would be a conflict of interest to have the agency that collects, investigates and enforces taxes to also be a tax preparer," Intuit CEO Sasan Goodarzi argued. Some Republican lawmakers, taxpayers polled by the IRS, and right-leaning advocacy groups agree. Intuit and H&R Block - which have spent $25.6 million and $9.6 million, respectively, on lobbying since 2006, according to The Associated Press - stated that they plan to fight the IRS's Direct File initiative, calling it redundant, unnecessary, expensive and potentially harmful for consumers. Shares of H&R Block and Intuit dropped after the IRS released its feasibility report. "Using the information it has from past returns and employers, the IRS could create first drafts of returns that taxpayers could check and submit." A 2022 study by Treasury Department economists found that the IRS could accurately fill in nearly half of a person's tax returns with the information it already has, for example. "They have invested heavily in technology, marketing and customer loyalty."Īt the same time, they do fear that eventually the IRS could expand its own program in ways they cannot, Rubin added.
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TurboTax paid a $141 million settlement in 2022 to people who were eligible for free filing but were steered away to costly upgrades.Įven with the new Direct File initiative, "the established position of companies such as TurboTax and H&R Block could limit how many taxpayers use an IRS program beyond the pilot phase," Richard Rubin reported in The Wall Street Journal. "That's because the tax-prep companies sabotaged the program, so they could keep raking in money," said Sen. Some 70% of taxpayers are eligible to use Free File software, but fewer than 3% do, according to the Government Accountability Office. taxpayers already have several free options, including filling out the IRS's tax forms on paper or online and using the Free File options at participating commercial sites.
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"We rely on an extensive network of partners across tax professional groups, the software communities, the payroll community and countless dedicated organizations that work directly with taxpayers," he said. IRS Commissioner Danny Werfel told reporters that "the IRS cannot run the tax system alone," and any changes will be voluntary. Should TurboTax be nervous? What are the commentators saying?
"Filing taxes can be time-consuming and difficult, and the IRS is committed to delivering significantly improved services by providing taxpayers with tools, information and assistance to make it easier to comply with their tax filing obligations," the IRS noted in its report.
In fact, The Washington Post reported, the IRS has already "quietly built its own prototype system to allow Americans to file tax returns digitally and free of charge," with help from the White House's U.S. The IRS's first report to Congress, released earlier this month, found that "many taxpayers are interested in using a free IRS-provided tool to prepare and file taxes and that the agency is technically capable of delivering a Direct File program," the IRS stated in a press release.
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